There were two main changes to SDLT announced in the Budget:

for first-time buyers there is nil rate up to £250,000 (provided the buyer intends to live in the residential property). This relief is limited to a two-year period from 25 March 2010.

The exercise of an option to tax (sometimes called the election to waive the exemption) has important consequences for the ability of a landowner to recover its input tax. If a landowner intends to make supplies of land or buildings that will be an exempt supply for VAT purposes (as will ordinarily be the case), it can exercise an option to tax. The effect of that option is to turn what would have been an exempt supply into a taxable, standard-rated, supply.

If a buyer agrees to pay the seller’s legal fees, then those fees (plus VAT) should be included when working out the chargeable consideration for SDLT purposes.

A reminder that HMRC changed banks last year (it now banks with Citi and RBS). Thus, all the sort codes and account numbers have changed, although HMRC is temporarily continuing to accept payments to its old Bank of England account.

There has been an obligation on promoters of schemes designed to avoid SDLT to provide details to HMRC since August 2005. However, those disclosure requirements only applied to commercial properties. Now, however, the regime extends to residential transactions as well.

Useful changes were made to the options to tax rules on 1 April:

The arguments rumble on as to the extent to which goodwill should be subject to SDLT. An article in the Gazette makes the point that goodwill is not an estate, interest, right or power in or over land, and nor is it an obligation, restriction or condition affecting the value of the estate – and thus it should not come within the scope of SDLT (under FA 2003).

Earlier this year, the ECJ held that the letting of flats and the cleaning of common parts are separate supplies (even if both are supplied by L). In the view of the ECJ, the cleaning services will not fall within the concept of ‘letting of property’, and, since those activities can be separated from each other, they cannot be regarded as a single transaction. Thus, they are separate operations – and the cleaning cannot be regarded as an exempt supply of letting.

Is money paid for a lock-out agreement VATable? Suppose you have a VAT-registered seller who exercises an option to tax over commercial property. He then enters into a lock-out agreement (ie a buyer pays him money, in return for an exclusivity period in being able to buy the property, with that money being put towards the purchase price if the buyer proceeds). In that situation you should give thought to the VAT implications. There are two possible arguments:

The VAT rate goes back to 17.5% on 1 January 2010, but can 15% be charged after that date? If the goods or services are supplied before 1 January, then 15% can be charged, even if the invoice is delivered after 1 January.

The general rule for cross-border business-to-business transactions is that the place of VAT supply is deemed to be where the supplier is. But, this is being reversed: from 1 January 2010, the general rule will be that the place of supply in a business-to-business context will be where the recipient is.

Normally the supply of residential house building, and the supply of building materials, will be zero-rated. But, there is an exception allowing the recovery of the VAT for a person who lawfully builds residential housing, provided they do not carry out those works in the course of business.

If a charity holds land as a capital asset then any gain on sale will constitute a capital gain. But, if the gain is applied for charitable purposes, it will be exempt from CGT.

The danger, of course, is that the transaction may give rise to a trading profit (eg if the land was acquired with a view to selling it for a profit then that can amount to a trade).

Do you need to charge VAT on your invoices to clients based outside the UK?

The answer is that you need to consider which jurisdiction your client belongs to and also, if they are in the EU, whether the client is acting in a non-business capacity:

if the client belongs outside the EU (including the UK and Isle of Man: you should not charge VAT;